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Delta to cut more jobs to stay alive

Struggling Delta Air Lines Inc. plans additional job cuts as part of its effort to avoid bankruptcy, chief executive Gerald Grinstein said in a memo to all employees.

"When our plan is successfully implemented, we will be the leaner, simplified, more productive airline we must be in order for us to survive and compete," Grinstein wrote in the memo late Wednesday. "Regrettably, one of the consequences will be fewer jobs and additional changes to pay and benefits for all of our employees as we make operational changes to achieve the necessary cost savings."

Grinstein sent the memo after concluding a daylong meeting with Delta's board to unveil his plan.

Delta has already laid off more than 16,000 employees in the last three years, as it has lost more than US$5 billion amid high fuel costs and stiff competition from low-fare carriers. The company and subsidiaries had 70,300 employees as of June 30. Grinstein's memo does not say how many more jobs will be cut, and a spokeswoman declined to comment.

Also Wednesday, Delta said it is considering exchanging some of its debt, possibly for equity in the company, as part of its larger effort to avoid bankruptcy.

The company's proposal involves certain equity certificates issued by investor groups that lease aircraft to the airline to assist in financing the planes' cost. It is asking the holders of those certificates to remove any restrictions that would prevent Delta from buying or holding the securities.

The US' third-largest airline said that if it is successful, it will have more flexibility in restructuring its debt, and therefore a greater likelihood of avoiding a Chapter 11 filing.

One of the options Delta is considering is a debt-for-equity exchange, according to a summary of the proposal provided Wednesday to reporters. The Atlanta-based airline has more than US$20 billion in debt.

Another part of Delta's work to avoid bankruptcy was to come yesterday, when the company meets with its pilots union in its campaign for deep labor cost savings. Delta is seeking US$1 billion in concessions from its pilots.
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